Sports Retailers Running On Empty

With consumers holding tight to their wallets due to the weakening economy, sporting-goods retailers need a hot new trend to catapult them out of their slump.

Hibbett Sports
, a sporting goods firm, lowered its earnings per share expectations for the fiscal fourth quarter late Monday, citing decreased traffic throughout the quarter, as well as the slowing economy.

The Birmingham, Al.-based company said it expects fourth-quarter same-store sales to fall and slashed its earnings per share guidance for the fiscal fourth quarter to 20 to 26 cents per share, compared to 39 cents per share in the prior-year period. The company had previously expected to report earnings per share of 36 to 44 cents per share.

The company is scheduled to report fourth quarter results on March 13.

Friedman Billings Ramsey slashed Hibbett’s rating to “market perform” from outperform.” Cowen & Co. cut the company’s 2008 earnings per share estimate to 97 cents per share from $1.15 and its 2009 earnings per share estimate to $1.07 per share from $1.35.

"Decreased traffic throughout the quarter due to the lack of a 'hot' trend or product technology, as well as the weak economic environment, have caused us to readjust our expectations for the fourth quarter,” said
Mickey
Newsome
Mickey Newsome
, chief executive officer of the company. “While we are disappointed with our performance, our inventory is well-positioned for the spring selling season."

Raymond James analyst Dan Wewer agreed that Hibbett’s would make a comeback. While he cut the fourth-quarter 2007 and 2008 estimates on the company to reflect the lowered guidance, he maintained his “outperform” rating on the stock.

"A number of high quality growth retailers are confessing to sales shortfalls during the fourth quarter," Wewer said. "We continue to like the long-term strategy of Hibbett's, which has served the company well during the past decade, and we do not see any reason why it cannot continue."

Goldman Sachs analyst Brad Cragin forecasts
Foot Locker
’s same-store sales will continue to fall because of the prospect of a recession and a lack of new merchandise trends. Cragin downgraded the company to “sell” from “neutral.”

Meanwhile, on Tuesday the Commerce Department said retail sales dropped 0.4% in December. It revised also revised down November's sales gain to 1% from a previously reported 1.2%.

“Consumer spending is facing increased headwinds and choppy water from the recent surge in energy and gasoline prices and the steady erosion in the value of homes across many metro areas throughout the country,” said Global Insight’s Brian Bethune.

While retailers have cut prices and increased discounts and coupons to keep consumers spending, sales continued to decline in December. Bethune said that there’s strong evidence that retail sales will continue to fall in January.

Sporting-goods retailers continued to feel the heat. Hibbett Sports led the pack in losses on Tuesday tumbling 16.2%, or $2.58, to $13.38 at the close.
Finish Line
slid 11.3%, or 22 cents, to $1.72.
Big 5 Sporting Goods
plummeted 14.3%, or $1.51, to $9.07.
Genesco
lost 6.6%, or $2.18, to $30.71.
Cabela’s
fell 7.5%, or 97 cents, to $11.91.

Dick’s Sporting Goods
was the bright spot on the horizon gaining 2.1%, or 55 cents, to $26.29 after raising its guidance on Tuesday because of strong same-store sales during the quarter.